Investor Presentation
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Investor Presentation December 2016 Forward-Looking Statements Statements in this presentation that are not historical facts are "forward-looking" statements and "safe harbor statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including those described in the Company's public filings with the Securities and Exchange Commission and any amendments thereto. The Company has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the Company’s expectations regarding its ability to meet its financial and strategic goals, the Company’s ability to further grow its portfolio on an accretive basis and the Company’s expectations with respect to future rent growth, including potential rent from the ROFO properties. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include risks related to the Company’s ability to receive, or delays in obtaining, any regulatory approvals required to own its properties, or other delays or impediments to completing the Company’s planned acquisitions or projects, including any acquisitions of properties from MGM Resorts International (“MGM”); the ultimate timing and outcome of any planned acquisitions or projects; the Company’s ability to maintain its status as a REIT; the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease those properties on favorable terms; the Company’s ability to access capital through debt and equity markets in amounts and at rates and costs acceptable to the Company; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in the Company's public filings with the Securities and Exchange Commission (the “SEC”). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements. In addition, the Company has included certain historical information in this presentation related to the Company and MGM, including historical information related to the Company’s and MGM’s business, financial condition and results of operations. The delivery of this presentation is not intended to and does not create any implication that there have been no changes to the Company’s or MGM’s affairs since the date of any of the historical information provided. Market and Industry Data This presentation also contains estimates and information concerning the Company’s industry, including market position, rent growth and rent coverage of the Company’s peers, that are based on industry publications, reports and peer company public filings. This information involves a number of assumptions and limitations, and you are cautioned not to rely on or give undue weight to this information. The Company has not independently verified the accuracy or completeness of the data contained in these industry publications, reports or filings. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the “Risk Factors” section of the Company’s public filings with the SEC. Non-GAAP Disclaimer This presentation includes certain financial measures, such as MGM’s Adjusted EBITDA and MGM’s Adjusted Property EBITDA, which are not calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Management recommends that you focus on the U.S. GAAP numbers as the best indicator of financial performance. These alternative measures are provided only as a supplement to aid in your analysis. MGM uses Adjusted EBITDA and Adjusted Property EBITDA as the primary profit measure for its reportable segments. Adjusted EBITDA is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, and property transactions, net. Adjusted Property EBITDA is a measure defined as Adjusted EBITDA before corporate expense and stock compensation expense related to MGM’s stock option plan, not allocated to each casino resort. Adjusted EBITDA or Adjusted Property EBITDA should not be construed as an alternative to operating income or net income, as an indicator of MGM’s performance; or as an alternative to cash flows from operating activities, as a measure of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. MGM has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in Adjusted EBITDA or Adjusted Property EBITDA. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA or Adjusted Property EBITDA information may calculate Adjusted EBITDA or Adjusted Property EBITDA in a different manner. Please see the Appendix for a reconciliation of MGM’s Adjusted EBITDA and Adjusted Property EBITDA to net income (loss) and of MGM’s operating income (loss) to Adjusted Property EBITDA and Adjusted EBITDA, all as reported by MGM. 1 MGM Growth Properties Operating Partnership • Publicly traded REIT engaged in owning, acquiring and leasing high-quality leisure, entertainment and hospitality assets with one of the largest portfolios of premier assets on the Las Vegas Strip based on hotel rooms and convention square footage • Assets leased to MGM Resorts creating $650 million of pro forma revenues as part of a long-term triple net master lease (including Borgata) • Additional built-in growth opportunities in ROFO assets, MGM National Harbor and MGM Springfield Geographic Overview 1 1 2 2 Detroit, MI Atlantic City, NJ 3 3 Las Vegas 4 4 Tunica, MS 5 1 Biloxi, MS 6 2 7 2 Master Lease Provides Stable Income Plus Embedded Growth Master Lease All properties subject to lease are cross-defaulted / guaranteed Parent Guarantee MGM Resorts guarantees all of the Tenant’s obligations under the Master Lease $650mm total year one rent Fixed rent component: $585mm – Subject to automatic annual escalator of 2.0% through 2021, generating >$60mm of rent growth – Thereafter, 2.0% escalator is subject to revenue to rent coverage at MGP assets of Stable Rent Structure with 6.25x or greater Embedded Long-term Growth 5 year adjustable rent component: $65mm – This $65mm component will not change through 2021 – In 2022, this adjustable component resets to 1.4% of trailing five year average property revenues – Provides long-term rent growth in line with property performance 30 year term Long-Term Lease – 10 year initial term – Four 5-year extensions at MGM Resorts’ option Tenant is responsible for acquisition, maintenance, operation and disposition of all (including Triple Net gaming) FF&E and personal property required for operations All capital expenditures are the responsibility of Tenant, REIT has no capital expenditure Capital Expenditure requirements ROFO Right of first offer on MGM National Harbor and MGM Springfield 3 Acquisition Of The Real Property Of The Borgata Transaction Overview Portfolio Pro Forma . MGP funded the acquisition with approximately $260 Dec. 31, 2015 Pro Forma million of cash, $295 million of borrowings under its # of 10 11 revolver, and the issuance of ~27 million OP units to Properties a subsidiary of MGM Resorts # of States 34 # of Hotel . Pro forma net leverage remains consistent with target 24,466 27,233 levels between 5x and 5.5x Rooms Meeting / . High single digit percentage accretion to AFFO per Convention ~2.5 million sq. ft. ~2.6 million sq. ft. share of MGP Space . Consistent with this accretion, MGP increased annual 2015 Revenue Diversification Pro Forma dividends by $0.12 per share to $1.55 beginning in the third quarter of 2016 Regional LV Luxury . Borgata added into the in-place Master Lease with 41% Borgata Mandalay 32% 17% MGM Resorts Bay Gold Strike 20% . Pro forma, increases rental income by 18% from 4% Beau $550 million to $650 million (prorated for the Rivage Mirage remainder of the first lease year) 8% 12% MGM Monte Detroit NY-NY Carlo Luxor 12% 7% 6% 8% LV Excalibur Upscale / 6% Midscale 27% 4 ROFO Assets − National Harbor (Washington, D.C. Area) MD Hollywood Baltimore WV Casino Horseshoe Casino Charles Town Maryland Live! Casino DC NationalNational HarborHarbor DE VA Key Competitors Project Highlights Project Cost: ~$1.4 Billion 93,100 sq. ft. of retail & dining Opening Date: December 8, 2016 3,000-seat theatre Location: On the Potomac River just outside of Washington 4,700-space parking garage D.C Additional Amenities: Luxury spa, roof-top pool Hotel with 300 rooms Casino with over 3,300 slots and approx. 160 tables (1) Meeting & Event Space: 50,000 sq. ft. ____________________ Source: MGM Resorts International public filings (1) Includes Poker Tables 5 ROFO Assets − MGM Springfield NH NY VT Albany Rivers Mohawk MA Everett Wynn Boston SpringfieldSpringfield Plainridge